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|Xiaomi is largely deemed as ill-equipped to compete with the dominant brands in Vietnam|
Massive difficulties waiting for Xiaomi
The smart phone market in Vietnam has been saturated by leading smart phone brands, including Samsung and Apple, putting smaller fish on the withdrawal with little to no profit.
Notably, almost all of the high-end market is dominated by Samsung, Apple, and Oppo, that make up 80 per cent of smart phone sales and 90 per cent of the revenue. In the low-cost segment, the market is held by Mobiitstart, Huawei, Vivo, Asus, Lenovo, and HTC, among others.
Both the high-end and low-cost segments are ripe with underground wars between competitors.
Meanwhile, Xiaomi has numerous disadvantages in the war for market share, putting the top spot far out of reach. Notably, although Xiaomi appeared in Vietnam in 2014, it has yet to fight its way among the top 10 smart phone brands in Vietnam. At present, Xiaomi only contributed 0.78 per cent to smart phone sales and 0.54 per cent to the market’s total revenue.
Furthermore, Xiaomi is a newcomer from China, struggling with Vietnamese customers’ deep-rooted preconceptions against low-cost “Made in China” products.
All in all, Xiaomi’s low-cost strategy to gain the top spot is considered too little.
Distribution system is the key
Doan Hong Viet, general director of Digiworld, the distributor of Xiaomi in Vietnam, issued the plan to popularise Xiaomi’s products in 15 cities and provinces this year and to build 1,000 Xiaomi stores across the nation by 2020.
In reality, building a secure retail distribution system across the country is considered a core factor in the success of a smart phone brand.
Oppo, which is the direct competitor of Xiaomi, ranks in the top three smart phone brands in Vietnam after only six years of entering Vietnam. In order to reach this success, along with meeting customers’ taste, Oppo focused on developing its retail distribution network. As a result, within a short three years, Oppo’s products were present on the shelves of almost all retail electronic stores.
Meanwhile, other smart phone brands like LG, Microsoft, Nokia, Sony, HTC, and Asus either had to withdraw from the market or maintain operations with low profit due to a failure in building out a nationwide retail distribution system.
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